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Thursday, June 16, 2016

Budget Process Reform

Comments for the Record

United States House of Representatives

Committee on the Budget

Members’ Day: Budget Process Reform

Thursday, June 16, 2016,
10:30 AM

By Michael G. Bindner

Center for Fiscal Equity

Chairman
Price and Ranking Member Van Hollen, thank you for the opportunity to submit
these comments for the record on budget process reform. These comments reflect what I published in my
book, Musings from the Christian Left in 2004 and which I transmitted to the
Committee in September of 2011.

For most of recent memory, especially in
years where large deficits loom, the Congress and the President have been
unable to reach consensus on a budget in time for the start of the fiscal year
on October first. This is almost scandalous, given the impact of the federal
government on the economy. The lives of millions of hardworking public servants
and contractors hang in the balance while Congress debates, or more likely
stalemates. While it is healthy to debate the nature of government from time to
time, holding the nation hostage to stage it is not.

When the government is divided between the
parties, budgets are submitted "dead on arrival.” This leads to a series
of missed deadlines and a likely impasse that threatens to shut the government
down at the beginning of the fiscal year. Often, the impasse leads to the need
for an Omnibus Appropriation Act, with its attendant pork barrel spending to
assure passage (a practice which further undermines citizen confidence in the
Federal Government). The same wasteful programs and tax benefits get funded and
the budget crisis goes on. This goes on because each side gains political
points for blaming the other, while no one has any stake in lessening their own
role.

The federal budget process is broken. It
must be replaced with a new budget process that allows for agreement on broad
issues and a continuation of government while the details and controversies at
the programmatic level are worked out. The solution must include incentives to
keep the process moving. To force congressional movement on overall priorities,
the administration withholds detailed appropriations proposals until a general
solution is passed in both houses of Congress and signed by the President (a
Joint Budget Resolution). After this is passed, detailed proposals are
submitted and acted upon by the authorization and appropriations committees. A
two-year budget process is suggested to assure the process is completed on
time.

Phase One: The Joint Budget Resolution

The first phase of the budgetary process is
high-level budget enactment. The budget message, revenue estimates and
increases, departmental, independent agency and functional spending totals, and
deficit projections are included in the Joint Budget Resolution proposal. Until
the resolution is enacted the Executive withholds detailed spending estimate or
authorizing language. The proposal is submitted to Congress during mid-January,
with passage of the Joint Budget Resolution by the July 4th recess.

A Joint Committee on the Budget considers the
resolution. The Committee consists of members of the leadership of both houses,
various committee chairs and members, and members not assigned to any major
authorizing or appropriations committee (who shall be a majority). The Chair
alternates between chambers. Such a committee is necessary to expedite action.

After the Committee reports the resolution
it is considered in an expedited fashion. If there are differences between the
amended versions of the resolution it goes back to the Committee one final
time, and acts as a conference committee in this case.

The Executive Branch uses the totals
enacted in the Joint Budget Resolution as the totals in its detailed
authorizations and appropriations submissions.

Phase
Two: Authorization

The second phase of the budgetary process
is authorization, which begins after the Joint Budget Resolution is signed, in
July of the first session. Most of the authorization process is accomplished
before the appropriations process begins. To guarantee this, no appropriations
bill is marked up in committee in either house until the authorization bill has
secured floor passage in that house, including tax and entitlement adjustments.
This occurs by February of the second session. At the start of a new
President's term honeymoon authorizations changes are submitted by February,
with enactment by September so that they take effect October first.

Authorization legislation addresses changes
to current law, revised spending ceilings and floors (which the marked up
appropriations bills does not exceed or fall short of subject to a point of
order), any new programs or program elimination (the only time these occur),
changes to agency regulations, adjustments to any entitlement, and estimates of
their effect on the next fiscal period.

The revenue committees examine the
progressivity of both taxation and spending to assure that the middle class
pays for itself and the upper 20% pay for the benefits they receive plus a
lions share of the benefits for the bottom 20% of income earners. Corrections
in the tax code are enacted as a result of this review. The revenue committees
also examine the level for cost of living adjustments (COLAs) and indexing.
COLAs and indexing are adjusted so the public sector neither loses or gains as
the result of inflation.

As part of this process, authorizing
committees consider major regulations enacted since the last authorization.
Doing so avoids the practice of appropriators playing games with the funding of
regulatory agencies, since Congress has the opportunity to work its will during
the authorization process. Before continuing on to the appropriations phase, I
briefly discuss ways in which regulatory power is exercised in such a way as to
not appear illegitimate by the vast majority of the public.

Increasing
Congressional Review of Regulation

A major theme in modern political life is
the popular protest against regulations enacted by unelected bureaucrats. This
anti-Washington theme aided the campaigns of many recent administrations,
including the current one. Other reforms in the regulatory review process
increased regulatory accountability to the President. However, these did little
to improve the position of Congress.

On June 30, 1983, the Supreme Court ruled
the legislative veto unconstitutional in an immigration case, In re: Chada. Since that time a Joint
Resolution of Disapproval legislative veto has been enacted as a general case.
Several other legislative vetoes have also been acted into law. However, many
of these cannot survive the standards imposed by the Chada decision. Therefore, Congressional control of agency
regulation remains an open question.

To regain control of regulations,
authorization committees review the body of regulations under their purview
during consideration of the President’s budget. The President or Independent
Agencies submit any changes to their major regulations (enacted since their
last authorization) as an appendix to their authorization proposals. If the
authorizing committees approve of the changes they do nothing. However, if they
are unsatisfied with the changes, or wish to make changes of their own they can
at this juncture. These changes are made one of two ways. The first way is to
write the change into law, which restricts subsequent action. If circumstances
change the agency then seeks legislative relief or waits until the next
authorization cycle. This option limits the ability of agencies to deal with
emergencies, making it undesirable. The second way is to change agency
regulation by law, allowing for further change as circumstance changes. This
almost superficial difference preserves flexibility in the regulatory process,
making it desirable.

Enactment of this proposal firmly places
regulatory initiative with the Congress. This approach gives the people say in
the regulatory process through Congress, strengthening representative
government. In doing so it helps the less well organized (who know how to reach
their Congressman, but not the administrative agency). The regulatory review
provisions have two more advantages over the status quo. First, they bring the
regulatory review process into sharper view, allowing for more involved citizen
input. Second, they avoid the constitutional pitfalls of the legislative veto.

Phase
Three: Appropriations

The third phase of the budgetary process is
appropriations. The Executive Branch begins preparing its detailed
appropriation submissions after passage of the Joint Budget Resolution in July
of the previous year. It modifies its targets when Authorization legislation is
marked up. The Appropriations submissions clear OMB and go to the Hill by March
15th of the second session. The submissions for each program are between the
ceiling and floor listed in the authorization legislation. The total for the
agency or department matches the total found in the Joint Budget Resolution.
Agency submissions reflect program financial performance. Agency personnel
defend the submission.

Appropriations sub-committees do not mark
up legislation until after the authorization has cleared the full chamber. The
full Appropriations Committees reports by June 15. If the total for an
appropriations bill exceeds the total specified in the Joint Resolution the
bill must clear the Joint Budget Committee before going to the floor.
Legislation gets to the President's desk by Labor Day.

If an appropriations bill is not enacted
prior to the start of the fiscal period (October 1) the current distribution of
spending within current law is maintained, minus programs cancelled in the
authorization phase, at the total set in the Joint Budget Resolution. This
prevents the government from stopping at the end of the fiscal year.

Enactment of this proposal restores
discipline to the budget process. Every actor in the process has specific
responsibilities and incentives to meet them. Each actor maintains his share in
the process, but not more than his share. The Executive Branch is forced to
offer realistic proposals. The Legislative Branch meets its deadlines. The
Federal Government then stops arguing about the budget and gets on with the
business of governing.

There is support for these propositions in
the academic and professional literature. Thomas Lynch of Florida Atlantic
University also advocates a two-step budget process in "Federal Budget
Reform," beginning with passage of a Joint Budget Resolution, which sets
overall spending priorities. After this resolution passes agencies submit their
requests, which are considered in detailed budget and bills. The strength of
this approach is that it forces Congress to decide on overall priorities before
they can begin to consider their local interests. Rudolph Penner and Alan
Abramson, in their landmark book Broken Purse Strings, support the
establishment of a Joint Budget Committee (echoing Senator Pete Domenici), a
Joint Budget Resolution and multi-year budgeting.

Thank you for the
opportunity to address the committee. We are, of course, available for
direct testimony or to answer questions by members and staff.